10QSB 1 form10qsb013102.txt 10QSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 2002 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 2-98997-NY NOVA INTERNATIONAL FILMS, INC. (Exact name of Small Business Issuer as Specified in its Charter) Delaware 11-2717273 (State or other jurisdiction (I.R.S. Employer of incorporation or Identification organization) Number) 6350 N.E. Campus Drive Vancouver, Washington 98661 (Address of Principal Executive Offices) (360) 737-7700 (Issuer's Telephone Number, including Area Code) Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No State the number of shares outstanding of each of the Issuer's classes of common equity, as of the latest practicable date: Common, $.00001 par value per share: 96,583,000 outstanding as of February 15, 2002 PART I - FINANCIAL INFORMATION Item 1. Financial Statements NOVA INTERNATIONAL FILMS, INC. Index to Financial Information Period Ended January 31, 2002 Item Page Item 1 - Financial Statements Balance Sheets 3 Statements of Operations 4 Statements of Cash Flows 5 Notes to Financial Statements 6-7 Item 2 - Management's Discussion and Analysis or Plan of Operation 8
NOVA INTERNATIONAL FILMS, INC. BALANCE SHEETS (Unaudited) JANUARY 31, OCTOBER 31, 2002 2001 ASSETS Cash $2,364 $2,878 Total assets $2,364 $2,878 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Accounts payable and accrued expenses $ 1,800 $1,800 Short term loan 16,624 16,624 Total liabilities $18,424 $18,424 COMMITMENTS AND CONTINGENCIES - - STOCKHOLDERS' EQUITY: Common Stock, $.00001 par value; 100,000,000 shares authorized, 96,583,000 shares issued and outstanding, respectively. $ 966 $ 966 Additional paid-in capital 8,197,260 8,197,260 Accumulated deficit -8,214,286 -8,213,772 Total stockholders' equity $-16,060 $-15,546 Total liabilities and stockholders' equity $2,364 $2,878
The accompanying notes are an integral part of these statements.
NOVA INTERNATIONAL FILMS, INC. STATEMENTS OF OPERATIONS (Unaudited) For the For the Quarter Ended Quarter Ended Jan. 31, 2002 Jan. 31, 2001 REVENUES: Interest $ 0 $ 3 COSTS AND EXPENSES: General and administrative 514 806 OPERATING LOSS $ -514 $ -803 PROVISION FOR INCOME TAXES - - NET INCOME (LOSS) $ -514 $ -803 Net (Income loss) per share $ -.00000 $-.00001 Average no. of shares outstanding 96,583,000 96,583,000
The accompanying notes are an integral part of these statements.
NOVA INTERNATIONAL FILMS, INC. STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH (Unaudited) For the For the Quarter Ended Quarter Ended Jan. 31, 2002 Jan. 31, 2001 Cash flows from operating activities: Net loss $-514 $-803 Net cash provided (used) by operating activities $-514 $-803 Cash flows from investing activities: Short term loan $ 0 $ 1,500 Net cash provided by investing activities $ 0 $ 1,500 Net (decrease) increase in cash $ -514 $ 697 Cash at beginning of period 2,878 1,247 Cash at end of period $ 2,364 $ 1,944
The accompanying notes are an integral part of these statements. NOVA INTERNATIONAL FILMS, INC. NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2002 1) Nature of Business and Organization Nova International Films, Inc. (the Company) was incorporated on November 27, 1984 in the State of Delaware. The Company was formed for the purpose of financing and producing motion pictures for distribution in the theatrical, home video and pay and free television markets throughout the world. a. Issuance of Common Stock On January 2, 1986, the Company completed a public offering, whereby ten million (10,000,000) units were sold at $.10 per unit, each unit consisting of one (1) share of Common Stock, $.00001 par value, and one (1) Redeemable Common Stock Purchase Warrant. These warrants have now lapsed. b. Disposition of Assets On May 12, 1993 (the "Closing"), the stockholders of the Company approved an Acquisition Agreement dated March 3, 1993 (the "Acquisition Agreement") by and between the Company and Epic Productions, Inc. ("Epic"), pursuant to which the Company sold, assigned, transferred and conveyed to Epic and Epic acquired from the Company (i) all of the issued and outstanding shares of capital stock of each of Byzantine Fire, Inc. a California corporation, Wings of the Apache, Inc., a California corporation, and A/R Productions, Ltd., a California corporation (collectively, the "Subsidiary Corporations"); (ii) all rights to the completed films "Triumph of the Spirit", "Firebirds" and "Why Me?", (sometimes collectively herein the "Completed Films"); and (iii) the Company's rights related to the film project "Carlito's Way" and Jean Claude Van Damme. In exchange therefor, Epic assumed all debts and liabilities of the Company with respect to the assets acquired, paid the Company the sum of $50,000, acquired the Bank Loan from the Bank as described in Note #4 "Debt" and modified the loan arrangements thereafter plus other indebtedness due Epic from the Company. 2) Summary of Significant Accounting Policies a. Financial Statement Presentation In accordance with the provisions of Statement of Financial Accounting Standards No. 53, the Company has elected to present an unclassified balance sheet. b. Per Share Amounts Per share amounts are based on the weighted average number of shares outstanding during the period. NOVA INTERNATIONAL FILMS, INC. NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2002 3) Short term loan An officer of the Company made a short term loans to the Company in order to allow the Company to meet certain working capital needs. Such loan is without interest and payable on demand. 4) Debt In connection with the financing of the film "Triumph of the Spirit", the Company was unable to pay Credit Lyonnais Bank Nederland N.V. (the "Bank") the note payable (the "Bank Loan") incurred to finance such film at its original maturity date of March 31, 1991. The Company was able to negotiate an extension of the maturity date of this note until September 30, 1991, but thereupon the Company became in default of its obligation. Upon the Closing of the Acquisition Agreement, Epic acquired the Bank Loan from the Bank and modified the payment terms of the Bank Loan assigned to it and other indebtedness of the Company to Epic. In October 1993, Epic assigned and contributed to the capital of the Company all of such indebtedness of the Company to Epic plus accrued and unpaid interest. In addition, at the Closing, $3 million of indebtedness (plus interest thereon) under the Bank Loan was not acquired by Epic, pursuant to which the Bank, Epic and the Company agreed that such portion of the Bank Loan (The "Nonrecourse Obligations") be payable interest and then principal only from operating receipts from "Triumph of the Spirit" which was acquired by Epic pursuant to the Acquisition Agreement. As of November 30, 1995, Nova assigned to Epic and Epic assumed the remaining $3 million Nonrecourse Obligations plus interest thereon. 5) Liquidity and Capital Resources At the current time, the Company's sole means to pay for its overhead operations is its existing cash in the total amount of $2,364. as of January 31, 2002. Accordingly, the Company has significantly reduced its overhead. The Company has no current business operations and is in the process of seeking a business opportunity. As of the date of this report, the Company has no agreement, understanding or arrangement to acquire or participate in any specific business opportunity. No assurance can be given that the Company will be able to consummate any such arrangements or, if consummated, that such business opportunity will be successful. Management has indicated that for the foreseeable future it will cover those costs necessary to retain the Company's corporate charter, file necessary tax returns, report to the Securities and Exchange Commission, and cover certain expenses in seeking business opportunities. Item 2. Management's Discussion and Analysis or Plan of Operation. The following discussion should be read in conjunction with the Financial Statements and Notes thereto and is qualified in its entirety by the foregoing. This report contains certain forward-looking statements and information relating to the Company that are based on the beliefs and assumptions made by the Company's management as well as information currently available to the management. When used in this document, the words "anticipate", "believe", "estimate", and "expect" and similar expressions, are intended to identify forward-looking statements. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. Certain of these risks and uncertainties are discussed under the caption "Uncertainties and Risk Factors" in Part I, Item 1 "Description of Business" of the Company's Annual Report on Form 10-KSB for the year ended October 31, 2001. The Company does not intend to update these forward- looking statements. The Company had no revenues from operations for the three months ended January 31, 2002 and for the three months ended January 31, 2001. During the three months ended January 31, 2002, the Company had a net loss of $(514) as compared to a net loss of $(803) during the three months ended January 31, 2001. On January 31, 2002, the Company had a working capital deficit and stockholders' deficit of $(16,060), $2,364 in cash, total assets of $2,364 and total liabilities of $18,424. The working capital deficit and stockholders' deficit is principally due to short term loans made by the President of the Company in order to allow the Company to meet certain working capital needs. At the current time, the Company's sole means to pay for its overhead operations is its existing cash in the total amount of $2,364 as of January 31, 2002. Accordingly, the Company has significantly reduced its overhead. In connection therewith, the Company does not pay any officer salaries and rent. Its costs primarily include only those costs necessary to retain its corporate charter, file necessary tax returns and report to the Securities and Exchange Commission, and certain expenses in seeking business opportunities. In addition, as a result of the closing of the Acquisition Agreement (see Notes to the Financial Statements included elsewhere herein), the Company has no current business operations and is in the process of seeking a business opportunity. As of the date of this report, the Company has no agreement, understanding or arrangement to acquire or participate in any specific business opportunity. During fiscal 2001, the Company did enter into a letter of intent to acquire Renewable Energy Corp. Such negotiations have since terminated. No assurance can be given that the Company will be able to consummate any other arrangements or, if consummated, that such business opportunity will be successful. Management has indicated that for the foreseeable future it will cover those costs necessary to retain the Company's corporate charter, file necessary tax returns, report to the Securities and Exchange Commission, and cover certain expenses in seeking business opportunities. PART II - OTHER INFORMATION Item 1. Legal Proceedings. None. Item 2. Changes in Securities. None. Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security-Holders. None. Item 5. Other Information. None. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. There are no exhibits applicable to this Form 10-QSB. (b) Reports on Form 8-K. Listed below are reports on Form 8-K filed during the quarter for which this report is filed: None. SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NOVA INTERNATIONAL FILMS, INC. (Registrant) Dated: February 26, 2002 By: /s/ William Rifkin William Rifkin, Chairman of the Board (Principal Executive Officer) Dated: February 26, 2002 By: /s/ William Rifkin William Rifkin, Principal Financial Officer